A federal appeals court will allow the Trump administration to collect all Section 122 tariffs it installed earlier this year, overruling a separate court order that deemed the levies unlawful.
In May, the Court of International Trade said the temporary 10% tariff was “unauthorized by law,” but only issued a limited injunction for two importers and the state of Washington, which were among the parties that filed lawsuits against the levy earlier this year. The federal government appealed the decision.
On Thursday, the U.S. Court of Appeals for the Federal Circuit lifted the tariff relief order until the appeal has been completed. In making its decision, the court also questioned CIT’s rationale for the stay in the first place, noting that the trade court’s interpretation of Section 122’s requirements “may be incorrect.”
“We conclude that the federal government has made a sufficient showing that it is likely to succeed on the merits [of its appeal],” the appeals court said in Thursday’s filing.
“For non-lawyers, that’s judicial shorthand for: the court currently believes the government has a strong chance of ultimately prevailing in the appeal,” Valerie Sorensen-Clark, a partner at Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, said in a LinkedIn post.
At question in the appeal is whether the Trump administration sufficiently met the requirements of Section 122 of the Trade Act of 1974 to install new tariffs. The statute allows a president to levy an up to 15% tariff for up to 150 days to address “balance of payment deficits.” In its May order, the CIT called the federal government’s use of Section 122 an “expansive reading of the statute.”
The appeals court conveyed a different perspective Thursday, rebuking what it called the CIT’s “narrow interpretation” of the statute. The appeals court also found merit in the Trump administration’s argument that blocking tariff collection would cause irreparable harm to the federal government.
“The case is far from over, and this is not a final ruling,” Sorensen-Clark said. “But it is the strongest signal to date that the Federal Circuit may ultimately uphold the legality of the Section 122 tariffs.”
Thursday’s order is the latest in a long line of legal machinations related to President Donald Trump’s tariff regime. In fact, the Section 122 tariffs were installed in direct response to a Supreme Court ruling invalidating levies Trump imposed under the International Emergency Economic Powers Act last year.
